To own a home is still many people’s dream in today’s world. As the times have been going, many people have tried their luck in various investments, major among them being real estate investment. In present times, real estate investment has grown into a big field and the homes being built are even more diverse as many contractors try to make more comfortable places for people to live.

A number of people are reluctant to venture into real estate investment inspite of the promising prospects on board. This is because they do not understand how the industry works. From a business perspective, real estate can be a worthwhile investment. It offers diverse benefits including generation of rental income, profits in the event that one decides to resell the house and it acts as collateral when you want to get a loan.

If you get into real estate investment, you will be sure of significances which come with fewer risks as long as you understand the various aspects of real estate. One of the best examples of a real estate investor is a person owning some real property in which he resides or he has let some of the houses and therefore receives rent payments from his tenants of a specific period of time. The other fine aspect of real estate is the fact that the value of a property appreciates especially for land and houses for living and this guarantees that you will continue receiving more returns as time goes by.

The Internet has made it easier for real estate investors to track possible ventures and explore new real estate investment offers. It is also a learning ground for anyone who wants to gain knowledge on real estate investment.

Low interest rates on mortgage have contributed to the explosion of real estate investment. More people can now afford to buy property compared to previous years. There has been an increase in the value of property found in big cities and towns, making many more want to invest. Another major contributor to this is the amount of equity, that is, the difference between real market value and the balance to be paid on the mortgage.

In some parts of the world, real estate investors take advantage of the tax breaks to invest and get huge returns eventually.

Real estate investment is better when you fully understand and cover costs incurred to ensure that the returns are visible.

Real estate is a big business and everyone seems to want to invest in real estate. You keep hearing a lot of stories about how people made a quick buck by investing in real estate. There are stories about people who made $50000 in a fortnight by making the right kind of investment in real estate. Every now and then, newspapers keep coming up with statistics about the appreciation in the real estate prices. There seems a mad rush for investing in real estate (and this gets even bigger when the mortgage interest rates are falling). However, not everyone has the time, money and expertise to be able to profitably invest in real estate. So what does one do? Is there any other option?

Yes, there is another way of investing in real estate and that is through Real Estate Investment Trust. Real Estate Investment Trust is an organisation that invests in real estate as a full fledged business. By investing in a Real Estate Investment Trust, you can become part of the real estate investment party and enjoy profits (of course, the assumption here is that the Real Estate Investment Trust is good and professionally managed).

Investing in Real Estate Investment Trust is very easy too. You can just buy Real Estate Investment Trust shares which trade on all major exchanges. There are certain laws governing the Real Estate Investment Trusts that help them avoiding the tax at corporate levels e.g. it is mandated that Real Estate Investment Trust’s portfolio has 75 percent of investment in real estate. Moreover, 75% of the income of Real Estate Investment Trust must be from rents or mortgage interest. There are various types of Real Estate Investment Trusts. Some Real Estate Investment Trusts own properties themselves and hence feed on the rental income from those properties. Some others indulge in providing only mortgage loans or go for mortgage backed securities. Then there are Real Estate Investment Trusts which do both i.e. rental focussed investments and mortgage based investments.

There are a number of Real Estate Investment Trusts operating in the market and a lot of these Real Estate Investment Trusts are doing good business. By investing in Real Estate Investment Trust you are basically investing in real estate without actually buying a property yourself. This is one easy way of investing in real estate (and much safer too). You must surely evaluate this option for your real estate investments.

Over the last several years, real estate has been as hot as any other investment. It wasn’t until recently that real estate cooled a bit. During this time, we’ve all heard the stories of the easy money made investing in real estate. When money was easy, and there was no end in sight to the real estate boom, people were flipping houses like crazy. For many of these individuals, the 1031 exchange money could not be any easier. However, the times have changed. The downturn has taught even the most bullish real estate speculators that real estate can also go down in value. More than ever, investing in real estate, takes professional know-how, time, and resources to successfully invest in real estate. So, how does the average person invest in real estate, this day and age?

Well, there is a way, and it’s been around for quite some time. It’s called a Real Estate Investment Trust, or REIT. A Real Estate Investment Trust is a way for the small investor to invest in big real estate. A Real Estate Investment Trust is an organization that is set up to manage and invest in real estate professionally. You can purchase a Real Estate Investment Trust (REIT) via the stock exchange in the form of a stock, or privately. Private Real Estate Investment Trusts typically require that certain suitability criteria be met. Also, private REITs are typically longer-term investments, with liquidity considerations. Public Real Estate Investment Trusts can be bought and sold on the stock exchange and are considerably more liquid than their private counterparts.

Investing in a Real Estate Investment Trust can come in many forms. You can purchase a Real Estate Investment Trust that focuses on large-scale commercial real estate, for example. This would allow you to take part in major real estate deals involving 100 plus story buildings, that would otherwise be available to the ultra rich. Some Real Estate Investment Trusts may have their focus in apartment buildings or even new housing construction. The point here is that you can choose your Real Estate Investment Trust sector through one of these REITs. If you want a more professionally managed approach there are a large number of REITs actively managed through the purchase of mutual funds. This can provide for diversification, and individual real estate sectors.

Properly set up Real Estate Investment Trusts are tax-advantaged. This means that they are not taxed at the corporate level. However, they must be set up properly. It is required that REITs invest 75% of their funds in real estate. These requirements are met by income derived from mortgage or rent interest. Essentially, you’re relying on other parties for their expertise in the real estate arena. Going at it alone is tougher than ever these days. You have the typical headaches, like qualifying for a 1031 exchange, property taxes, escrow, title insurance, and so on. But, that’s really the easy part. When the real estate market only went up, the biggest worry for speculators was how to take advantage of a 1031 exchange and save on capital gains. Now, there’s much more to worry about, as real estate not only goes up, but it can certainly come down.

It’s important to keep in mind that Real Estate Investment Trusts also come with inherent risks. If real estate values plummet, and you have a large percentage of your assets exposed to Real Estate Investment Trusts you may experience declines, as well. This is where diversification is very important. The standard Real Estate Investment Trust me diversify you within different types of real estate, but you should always practice further diversification. Investing in different asset classes, sectors, and the life will provide you with further diversification. Make sure to work with a qualified investment advisor or do your due diligence when investing in any type of Real Estate Investment Trust.

The Phoenix residential real estate market represents a great opportunity to individuals, families, and investors who are weary about the stock market and are realizing that their investment portfolios are too exposed to fluctuations in Wall Street.

By now, the reality has sunk in with most people – the stock market’s decline has hit 401K and other retirement investments hard. As a result, this is a critical time to for individuals, families, and investors to rethink diversification of their portfolios again. Portfolios need to be more highly diversified than ever before.

And it’s time to rethink real estate as one component of your diversification in the future in addition to stocks, bonds, commodities, international investment, and low-risk savings instruments, to name a few.

Wall Street, Main Street, and My Street, and Real Estate

There is no doubt that the goings-on in the real estate industry are intermingled with the market challenges that Wall Street is facing, which in turn impacts Main Street and “My Street.” But the issues with real estate largely emanated from the many corporations that make up Wall Street combined with lack of government oversight and inaction. Lack of personal discretion also contributed to the problem.

Having said that, here is why real estate should be a component in your investment portfolio once again, and why the Phoenix real estate market is an excellent choice for investment to help you diversify that portfolio.

First, due to the wave of foreclosure-related properties, prices have declined to 2004 and even 2003 pricing levels. This is pricing that is pre-run up. Though there is a risk that prices may drop further, the extent of a further decline may be limited in the short term while the long term outlook gradually gets stronger.

Second, real estate can prove to be a more reliable investment in a normal market environment. Prior to the run-up in home valuations in the second half of 2004 through 2005, annual home appreciation in the Phoenix residential real estate market averaged 5%-6% . Playing the long game as investors should, holding a property for 5-20 years could yield a solid return.

Long term is key here. The investor has to be committed to a lower but steady return on their investment when it comes to real estate. The Phoenix housing market will not likely experience a meteoric rise in valuations like it did again. That’s not to say that there won’t be some opportunities to turn properties fast (whether through acquisition at a foreclosure auction or wholesale, or a flip), but this model will have the high risk that most investors will and should shy away from.

One note here. At least in the Phoenix area, investors have to weigh the merits of investments in homes and real estate by several components to get a true picture of the return on a property. These factors are growth in appreciation, rental income and offsets, tax benefits, and equity paydown and buildup.

Third, real estate is real. You can see it. You can touch it. You can check up on it (if you buy locally). And it will always hold some intrinsic value no matter what happens. If you have a home in Chandler, it is easy to get across the Phoenix area, to check up on an investment property in Glendale. Or, perhaps the investment property you choose is right next door to your home in Tempe.

Fourth, under certain circumstances, real estate taxation on capital gains growth can be minimal. The same cannot be said of many other investment vehicles.

Fifth, an investor has much more control in determining the value of the property. Smart improvements and renovations combined with effective property management can increase the value of the property substantially.

Sixth, the Phoenix area continues to grow. The Valley saw a 2.8% increase in the number of residents here last year. This trend will continue as Phoenix and surrounding areas are perceived as a stable, optimum climate to live and to work. With the decline in real estate prices, this perception will also be reinforced by a sense that Phoenix and surrounding areas are once again affordable.

Finally, real estate can serve a dual investment/personal objective. For instance, an investment in real estate can serve as a later gift for children. Or, it can be utilized as a sort of savings plan for children’s college tuition as a complement to 529s and Coverdell plans. The investment could be a retirement property for later in life. Real estate investments can also be used to create income streams to live off of (when rents and equity buildup eventually turn the property cash-flow positive).

There are numerous reasons to invest in real estate even beyond this list.

Real Estate Has A Role to Play in Your Investment Portfolio

The difficult truth about the stock market is that over the past eight years, the U.S. economy has seen two major disruptions or recessions that were severe enough to have rippling effects for all Americans as seen by the decline in 401K and other retirement savings values. As a result, further diversification of investment portfolios is needed across many different asset classes with a regional focus as well.

Real estate should be one of those classes. Given real estate has seen real substantial pricing declines over the last three years to levels seen before the run-up period, one has to consider that there are real deals in the marketplace for real estate. Coupled with the right long-term outlook and commitment to investment fundamentals, real estate can have a more effectual, countervailing purpose in investment portfolios that can help Americans better weather substantial market disruptions in the future. For investors looking for specific markets that may be worthwhile to investigate, real estate in the Phoenix area is a compelling choice.

Investing in income property can be a great way to increase your capital. But for many people, investing in real estate, especially commercial and industrial real estate is just out of reach from the financial point of view. But what if you could join forces with other small investors and large investments in commercial real estate in the group? With Real Estate Investment Trust, you can do it!

REIT means Real Estate Investment Trust, and is sometimes referred to as “real estate holdings.” Real estate investment trust is a companie that owns and manages a portfolio of real estate and mortgages. Anyone can buy shares of the REIT. Real estate investment trust offers the benefits of real estate without the headaches or expense of the landlord. Said another way the investor has the benefits of real estate ownership with no management role in the toilets and tenants.

Real Estate Investment Trust of certain types offers great benefits of liquidity and diversity. In contrast to the actual ownership of real estate, these measures can be quickly and easily sold. And because you invest in a portfolio of real estate, rather than one building, it comes with less financial risk.

Real Estate Investment Trust was created in the sixties when Congress decided that small investors should also be able to invest in large-scale, income-generating properties. It was found to be the best way to make it a model of investment in other sectors – the purchase of shares.

The company must distribute at least ninety percent of their taxable income to shareholders each year as a Real Estate Investment Trust. Most Real Estate Investment Trust pays out one hundred percent of their taxable income in dividend distributions. To maintain its status as a pass-through entity, Real Estate Investment Trust dividends are paid to shareholders annually.

From 1880 to the 1930’s, a similar provision in place, which allows investors to avoid double taxation – paying taxes as private and business – were convinced, because they do not pay income tax if the income is distributed to beneficiaries. It was abolished in the nineteen thirties, when the passive investments are taxed at the corporate level, as well as part of the profit tax. Real estate investment trust supporters were not able to change the law to overturn the decision within thirty years. Due to high demand for real estate funds, President Eisenhower signed the nineteen sixty Real Estate Investment Trust as a REIT tax pass-through entities.

The company must comply with all other requirements to qualify as a real estate investment trust and to win passage of a person. They should:

1. Be structured as corporation, business trust, or similar association

2. Be managed by a board of directors or trustees

3. Offer fully transferable stock shares

4. Have at least one hundred shareholders

5. Pay dividends of at least ninety percent of the REIT’s taxable income

6. Have no more than fifty percent of its shares held by five or fewer individuals during the last half of each taxable year

7. Hold at least seventy five percent of total investment assets in real estate

8. Have no more than twenty percent of its assets consist of stocks in taxable real estate investment trust subsidiaries

9. Derive at least seventy five percent of gross income from rents or mortgage interest

At least ninety five percent of a real estate investment trust gross income must come from financial investments (in other words, it must pass the ninety five-percent income test). These include rents, dividends, interest and capital gains. In addition, at least seventy five percent of its income must come from certain real estate sources (the seventy five percent income test), including rents from real property, gains from the sale or other disposition of real property, and income and gain derived from foreclosure of property.

This article was written by Robert Shumake, CEO of Inheritance Capital Group, LLC and founder of http://reitbuyer.com/ an online service for people who wish to invest in real estate without the headaches and liability exposure that go with being a landlord. Visit Robert’s website to learn more about Real Estate Investment Trust.

Now seems to be the best time to invest in properties in college towns where housing demand is high due to a soaring rental market according to the New rules of real estate by Business 2.0 Magazine. With home prices still out of home buyer’s range, and homeowners selling their homes due to rising interest rates, rents are expected to increase nationwide. This makes buying investment property in rental markets such as college towns an attractive option, one that is already being pursued by investors. Rents are expected to rise by 5 % by the end of this year according to the National Association of Realtors (NAR), and investors are looking at college towns with increased interest.

There are two major reasons why it is prudent to buy investment property in college towns now. When compared with other rental markets, the rentals in apartment buildings in college towns are much stronger and hence more profitable. This has been augmented by the fact that apartment buildings in college towns are fewer in number. This demand for apartment buildings has also increased due to the rising admissions in colleges mostly from the Gen Y or the echo boomers, which has further increased the asking rates in the college town rental markets. These properties have a low vacancy rate, especially in buildings located near the campuses. Investors in commercial apartment buildings also get to increase their rent with the mounting demand making such investment a highly profitable venture.

So if you are a prospective landlord who has decided to encash this favorable situation, then you can start with choosing the college town that has the lowest ratio of university-owned beds to the student population. As Michael Zaransky, co-founder of Prime Property Investors in Chicago says, prospective investors would do well to pick the college towns that have the ratio of university-owned beds to students at 30 % or lower. One should also look into colleges that propose to expand their student ranks by 2 or 3 % every year.

Investors should also need to take into consideration the disadvantages involved in owning commercial apartment buildings in college towns. The business could be trying sometimes, and involves risks with college policies liable to changes and the difficulty involved in predicting volatile student demand. However, considering the high rate of returns that the investment has to offer, the pros seem to far outnumber the cons making buying investment property in college towns a smart option.

Recently Slovenia property was voted one of the top ten overseas property destinations in which to invest in and forecast growth is nearly 300% over the next ten years. Here we will look at the advantages of Slovenia property investment.

Many property investors have not heard of Slovenia yet, it is a small, dynamic and beautiful country located at the very heart of Europe, bordering Croatia, Austria, Hungary and Italy.

EU Membership and the Property Boom

As a recent member of the EU, Slovenia has already adopted the euro as its currency and has the highest GDP of any of the new member states. It is situated at the very centre of Europe between the old Eastern block and the West and has a well educated workforce as well as being strategically placed.

With EU membership, community funds and foreign investors have poured billions into the country and higher disposable incomes, has seen a higher demand for quality property.

This has resulted in supply exceeding demand and strong rises in values across most of the country.

30% + Growth per Annum

Ljubljana (the capital) has seen rental incomes and property prices soar and growth rates have exceeded 30% per annum in many districts. The property boom is not just in the capital but country wide. Skiing property in Slovenia has risen sharply in value and the popular resorts such as: Lake Bled and Bohinj have also seen strong rises.

While higher disposable incomes are helping property prices rise, there is another reason behind the growth and that’s tourism.

Slovenia is Beautiful

Slovenia may only be a small country – but it has much to enjoy, from soaring mountains, to lush valleys dotted with vineyards, fairytale forests and mighty rivers such as the Soca River. Slovenia even boasts an unspoilt stretch of Adriatic coastline, with the beautiful Venetian town of Piran at its heart.

Increasing Tourist Numbers

As access becomes easier to Slovenia, with an increase in budget airlines flying more frequently, more and more people are coming to enjoy the delights of the country and more will come, as the Government funds advertising of the tourist industry.

The Boom is in Its Infancy

Slovenia property is still competitively priced in many areas of the country and the potential for future growth is good. Property booms last for decades and this one looks to be in its infancy.

Buying Is Easy

Buying Slovenia property is straightforward and the buying process is designed to protect both buyers and sellers. To complete a property transaction should only take about a month. Finance and mortgage options are available locally, secured on the local property, rather than the buyer’s principle place of residence.

A Great Property Investment Destination

Today there are many specialist Slovenia estate agents to help you get the Slovenia home of your dreams. If you are buying overseas property as an investment or simply for pleasure discover Slovenia property and you maybe glad you did.

There are many conventional factors such as location, quality of construction, list of amenities and so on that adds value to a condo property. But there is another factor, which is often overlooked, but has a definitive effect on the property prices. It is the celebrity factor. When world famous celebrities buy properties in an area, the other properties in the area inevitably gain value. This is one factor that is pushing up the property prices in Belize, especially the Belize condos in Ambergris Caye, Placencia and in San Pedro. When the world famous Hollywood stars like Leonardo di Caprio and Francis Ford Coppola decide to buy properties in a country, it inevitably attracts a lot of attention from the investors.

Even if you lack the resource for buying an entire island like the celebrated stars, you can still grab a space for yourself in the celebrity hotspots. For example, you can invest in one of the units in luxury condo hotel that Di Caprio is constructing and which is going to be groomed and managed by Four Seasons Group as an eco-friendly tourist destination. There are many more upscale Belize condos available for sale in several parts of Belize. And in addition to the most popular destinations such as Belize City, Ambergris Caye or Placencia, you can also explore the Belize condo markets in such upcoming areas as San Pedro and St. George’s Caye, Caye Caulker, coastal islands of Toledo and in Belmopan.

Although tourism grew by leaps and bounds in the country, Belize is still regarded as an undiscovered vacation destination. With a stunning collection of desolate islands, sparkling beaches, barrier reef and rain forests, Belize is easily one of the most beautiful countries in the world. With its diverse animal and plant life, it makes a nature lover’s paradise. Go deep sea fishing or take up some scuba diving, sail on the sea or just soak the tropical warmth at the beaches—Belize can offer you everything that you can expect from an unforgettable holiday. No wonder, many Americans follow the footsteps of their favorite celebrities and end up buying properties in the country. Since Belize condos are perfectly tuned to the needs of modern travelers, most of the overseas buyers go only for Belize condo properties when it comes to buy their second home in the Caribbean’s.

Based on English legal system, Belize propagates private property rights for everyone. Then there is no capital gain tax and no inheritance taxes Added to the prices of Belize condos. Property appreciation remained stable over the past twenty years. The country has a stable political environment and well connected to the rest of the world. All these make a profitable investment in Belize condos in the current market situation.

In a nutshell, if you are looking for the right property at world’s one of the scenic locations, for a reasonable price range, then Belize condos can give you an excellent value for your dollars.

Turkey offers attractive investment opportunities to investors who wish to catch the start of a property market that is on the verge of explosive growth. Surviving the economic crash few years back, it has emerged stronger to resist the current phase of global economic slowdown. The property market of Turkey has evolved from providing cheap housing to urban population, to an ever increasing number of overseas investors wishing to invest in property for holiday lets. Turkey has recently started the process of gaining membership into European Union, and whilst this may be a lengthy process it will add significantly to the economy and to the property market in specific. The government has recently introduced new legislation to enable foreigners buy property in Turkey, and is endeavoring to make the real estate transactions more transparent and easy to transact. This has fuelled an unprecedented demand for Turkey properties, especially in the coastal areas.

Majestic mountains, rivers, crystal clear seas with long sandy beaches are the main attractions of this splendid country. Long summers, relaxed lifestyle and a low cost of living have made it a preferred retirement destination for many Europeans. It has a huge population of wealthy middle class looking for affordable property. Officially, there is a shortage of more than 2.5 million houses in Turkey, therefore creating a large demand for re-sales of property which is ideal for the investor. Depending on location and quality of the property, Turkish properties can produce capital appreciation in the order of 25% to 30% per annum. By investing in solid projects in the best locations at the off plan stage, investors can buy at discounted rates and sell on prior to project completion. A short term investment of this type can reap significant benefits.

Long-term investors looking to make some money along with owning a property can be assured of a rental yield of 5-10% in addition to a healthy appreciation of the investment. A massive growth of 13.1% of foreign visitors, mainly from Austria, France and Slovakia has aided the growing demand of real estate. There are certain areas where investments in properties have yielded better returns owing to domestic or foreign interest. Areas such as Bodrum, Western Mediterranean and in particular Istanbul have experienced significant returns.

Properties in Gocek offer exotic sea and mountain views with easy access to historical sites and best beaches. Fethiye is surrounded by clear blue waters of the Mediterranean, dotted with restaurants, sports, entertainment facilities and exotic holiday destinations. Another area popular with Turkish as well as foreign investors are Bodrum Peninsula. Described as last of the affordable paradise on earth, it is just 35 km from international airport. Properties range from traditional Turkish homes to luxury villas and apartments.

Recently with government initiative to develop tourism infrastructure, the area around Dalaman has emerged as a popular destination. Virgin mountains and beaches, spectacular countryside, golf courses and the international airport have added to the value of the property at Dalaman. In addition to these beach locations properties in major cities such as Istanbul are in very high demand. The Turkish government has taken initiatives to develop satellite districts around Istanbul. Satellite districts such as Beylikduzu, offer luxury lifestyles to the local middle classes in well-planned urban environments. These properties have emerged as lucrative investment options for investors in the Turkish property market.

Let’s use St Lucia as an example. It is an established and increasingly popular holiday destination that is also one of the most accessible – three major airlines from the UK provide a direct service to St. Lucia (8 hours), and a direct service is available from the following US airports – New York (5 hours), Miami (3 hours), Charlotte (4 hours), Philadelphia (5 hours) and Atlanta (4.5 hours). St Lucia has a stable economic and political environment with a high probability of price appreciation over the next ten years. St Lucia has many of the same advantages as Barbados but property prices are currently 60% lower.
The World Bank has recently placed St Lucia in the top 30 countries in the world to invest, making St Lucia the only Caricom country to make the top 30, ahead of Barbados and Antigua. The general crime rate in St Lucia is one of the lowest in the Caribbean, making it a safe haven for tourists and for living. What’s more the island benefits from a stable government and economy, and there are very favourable tax concessions for property buyers from overseas: No Rental Income Tax, No Capital Gains Tax, No Inheritance Tax, No Repatriation Tax. The island is still unspoilt and undeveloped, although several new developments have recently been started. The government sees expansion of tourism as a key objective and the growing popularity of the island for holidays mean that there is excellent rental potential for properties. The real estate sector in St Lucia is booming. St Lucia is still one of the most reasonably priced islands in the Caribbean for property acquisition with prices 60% lower than on Barbados. Property prices have increased by around 40% per annum for the last 2 years, and are projected to continue to rise for the next 5 years.
This all points to a fast maturing property market in St. Lucia with increasing prices, making an early commitment to a home a sound investment in lifestyle and real estate. Rental Comparison

The table below shows typical room rates for 5 Star accommodation in St Lucia with prices quoted in sterling:

Accommodation Current Price per night** Hotel Studio £130 1 Bed Apartment £180 2 Bed Apartment £250

Based on a studio apartment priced at £95,000 with a 10% Rental Guarantee you would receive £9,500 per year for the first 2 years Thereafter, a 50:50 split of the net room rate shared with the hotel. Lets’s assume a conservative room rate of £130 per studio per night

If we also assume a conservative occupancy rate of 65%* the rent receivable would be as follows:

£130 x 365 x 65% = £30,800

£30,800 split 50:50 with the hotel provides a gross income for the investor of:

£15,400 per annum

If you were to do the same calculation for a 1 bedroom and a 2 bedroom apartment the figures would be as follows:

  Rent per annum Gross Yield per annum*** Hotel Studio purchased at £95,000 £15,400 16.21% 1 bed apartment purchase price £125,000 £21,300 17.04% 2 bed apartment purchase price £150,000 £29,650 19.77%

With gross yields from buy to let investments in the UK averaging around 5% per annum the conservative figures above really do make interesting reading!

* The average occupancy rate for similar developments in St Lucia is believed to be 80 to 85%.

** Figures quoted at current room rates, which we fully expect to increase over the development period.

*** Note: the gross yield figures do not allow for the rolled up interest on the stage payments and deposit (if chosen).

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Merrill Lynch has recently published the World Wealth Report 2008

Looking To The Caribbean As A Whole

It reports on the wealth of the world, and in particular how the various property markets are doing.

In summary:

a) There is more money available globally than before
b) There are more millionaires than before
c) This wealth is being created from emerging markets – and the Caribbean is named as a HOTSPOT!
d) The ultra wealthy look to invest in places with global communications, sports facilities and a green policy – all of which we have!

Therefore there is still wealth to be invested, and there is still wealth spending money on tourism!!

Interesting quotes from the report:

Source: Robert McCann Vice Chairman and President Global Wealth Management Merrill Lynch & Co. Inc.
Merrill Lynch Global Wealth Report 2008

“The US economic slowdown weighed heavily on key mature regions. However strong performances in emerging markets boost high net worth individuals gains around the globe….world growth was strong in 2007 and drove sold increases in both HNWI populations and overall wealth”

“Growth in global HNWI wealth of 9.4 from the previous year”

“Emerging markets (showed) the greatest…gains”

“50% more cash available in Russia”

“still strong…emerging markets are likely to sustain high levels of growth”

“globally direct commercial real estate investments rose 8.4%”

“as signs of financial market recover appear, we project that high net work individuals will likely return to their pursuit of high returns, particularly in emerging frontier markets – such as the Caribbean”

“despite rising cost and financial market turmoil, high net worth individuals did not give up expensive purchases” IE Luxury purchases including property and travel.

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Quotes and Information on the Caribbean

Liam Bailey, Head of Residential Research Knight Frank
“global property prices rose by 11% during 2007″

“highest price growth achieved by prime residential properties was in Antigua (40%)”

“the strongest growth was being demonstrated in the emerging economies…with a second streak of strong growth in second home hot spots in…the Caribbean”

Financial Times, 21 April 2007
‘Demand from buyers has been strong… and property prices rose 40 per cent last year as a result.’

Ft.com, June 1st 2007
“What we are seeing in the Caribbean is a lot of new development going on and it appeals beyond the US: it appeals to the Europeans who are attracted to the Caribbean.”

Ft.com, June 1st 2007
“People are spending from $4m to $10m on the houses in the region. Certainly prices in the Caribbean are higher than in the past. It’s not difficult to spend $15-$20m or even $40m for really top of the line estates”

Ft.com, June 1st 2007
Mr Ryan recounts how the project began, 10 years ago. “In 1997, Ritz-Carlton invited me to do a project here. They are a management company, and saw that the market was underserved. They saw potential here. They tried to get the project done on their own and, when it did not happen, they decided to reach out to a developer. ‘If you make it happen, we will give you a brand and manage it,’ they told me.”

Ft.com, June 1st 2007
“The average appreciation is 12 per cent a year for the past 17 years. Bear in mind that this return is not taxed by the local authorities.”

www.Propertyweek.com, 4th April 2008
In 2007 the small overseas property fund outperformed the UK real estate by around 50%.

Peter De Savory, quoted on www.Propertyweek.com, 4th April 2008

“You can buy first class new land for $700 to $1,200/sq ft. In Barbados it’s around $2,500.”

“It’s not as if all the rich people have died,’ he says with a wry grin. ‘Leisure is quite a protected sector. There will always be people who need a holiday in the sun, and not everyone in the world wants Dubai or the south of France.

‘Provided you are creating value in the mind of the customer then the price is not the issue. It’s not whether it is expensive or cheap. We’re not providing people with essentials we are providing them with an indulgence. ‘Value is intangible. It’s about an aroma of attractiveness. There is no logic to it…
Figures from World Tourism Organisation, “Tourism highlights 2007”
Globally, international arrivals have grown by 400 Million people since 1990, a growth rate of 94%, averaging 3.6% per year since 2000. Within the Caribbean, international arrivals have increased by 8 million people in the same period, an increase of 41.2%, with an average of 2.2% since 2000.

Ft.com, October 3rd 2004 and March 28th 2003
The tourism industry brings the Caribbean’s struggling economies about $20bn (£13bn) a year, and accounts for 30 per cent of gross domestic product and provides one of every four jobs.

The $20bn tourism industry is the ‘economic mainstay’ for many of the Caribbean’s island states. For example, ‘the gross domestic product for the Bahamas was $5.3bn last year. Seventy per cent of that was generated from tourism-related business.’

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Quotes and Information Specific to St Vincent & The Grenadines

Tourism
www.svgtourism.com
Caribbean tourism organisation, “St. Vincent and The Grenadines 2006”

In 2006 the breakdown of international visitors to St. Vincent and The Grenadines breaks down as follows:

US 28,598 (29.4%)
UK 14,837 (15.2%)
T&T 11,002 (11.3%)
Canada 6,542 (6.7%)
Other Caribbean 27,217 (27.9%)
Other Europe 7,214 (7.3%)
Rest of World 2,112 (2.2%)

The number of UK visitors to St. Vincent and The Grenadines in 2006 was 14,837, 15.2% of the total number of visitors to the island (94,432). The total number of arrivals has increased by 25.5% since 2002 at an average rate of 5.93% per year during this period.

In 2006 Total Expenditure by tourists was $95.6 million.
The Tourism Budget was $3.474 million.

In 2007 total visitors increased by 16.5%. The UK (21.4%), Canada (8%) and USA (2.7%) all saw significant growth.

Economic Growth
Eastern Caribbean Central Bank
Between 2003 and 2007, the economy in St. Lucia has grown on average at 6.03%

Tax Incentives
National Investment Promotions Inc
In line with the governments aim to encourage growth in Tourism concessionary rates of tax are payable on property.

For tourism related development where the occupancy tax is applicable and the annual rental value exceeds $20,000 the tax charged is 1.5% rather than the usual 5%.

Investment Promotions Inc
Hotels with more than 35 rooms are granted 15years income tax exemption from date of opening of the resort.

An approved construction order grants concessions for construction materials for excise duties and consumption tax

Resorts accommodating more than 100 people are exempt from import duties on food and beverages.

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Quotes and Information Specific to Barbados

Tourism
Figures from Caribbean tourism organisation, “Barbados 2006”

In 2006 the breakdown of international visitors to Barbados breaks down as follows:

2006 visitors UK 211,523 (37.6%)
US 130,767 (23.2%)
Other Caribbean 82,989 (14.8%)
Canada 49,198 (8.7%)
T&T 34,480 (6.1%)
Other Europe 29,400 (5.2%)
Rest of World 24,201 (4.3%)

The number of UK visitors to Barbados in 2006 was 211,523, 37.6% of the total number of visitors to the island (562,558). The total number of arrivals has increased by 13% since 2002 at an average rate of 3.13% per year during this period.

In 2006 the total Expenditure by tourists was $ 763.2 Million. This averaged out to $127.48 per day for each tourist in Barbados.

Economic Growth
St. Lucian Budget Address for Financial year 2008/2009
Economic growth for Barbados in 2007 was 4.3%.

Ft.com, January 23 2004
When considering the welcoming nature of the locals to settling tourists it is worth considering the Bajan Governments policies. Described as “far-sighted,” All its beaches are available for use by the whole population as they are national property. This encourages integration between visitors and Bajans.

Tax Incentives
Barbados Tourism Investment Inc, “Legislation and Incentives”
One of the main tax incentives offered by the Bajan government is the Tourism Development Act. This was designed to offer incentives to expand the tourism and hospitality sector by offering incentives and corporation, Import Duty and other tax concessions.

These incentives also include provision for “investors in tourism projects to benefit from write off of capital expenditure and 150% of interest. There is also exemption from import duty, value added tax and environmental levy in respect of furniture, fixtures and equipment as well as building materials, supplies and equity financing.”

Concessions under this act include:
Duty-free importation (including waivers of Value Added Tax (VAT) and Environmental Levy) of building materials and equipment during construction and rehabilitation;
Duty-free importation (including waivers of Value Added Tax (VAT) and Environmental Levy) of supplies for refurbishment of hotels, restaurants, villas and sports and recreation facilities for tourism purposes;
Extended tax holidays/write-off of capital expenditure and accelerated write-off of interest;
Training of empoyees;
Marketing
PriceWaterHouseCoopers, Tax, Facts and Figures: Barbados 2006
Barbados also offers other tax concessions. Land tax is calculated and payable on only 50% of the improved value of the property for hotel developments.

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Quotes and Information Specific to the Dominican Republic

Dominican Republic: Tourism and Economy Statistics and Government Incentives

Tourism
Figures from Caribbean tourism organisation, “Dominican Republic 2006”
In 2006 the breakdown of international visitors to the Dominican Republic breaks down as follows:

USA 1,092,317 (27.5%)
Other Europe 812,511 (20.5%)
Canada 509,323 (12.8%)
UK 242,559 (6.1%)
Germany 226,737 (5.7%)
Italy 144,115 (3.6%)
Other 937,493 (23.6%)

The number of UK visitors to the Dominican Republic in 2006 was 242,559, 6.1% of the total number of visitors to the island (3,965,055). The total number of arrivals has increased by 43% since 2002 at an average rate of 9.62% per year during this period. The Dominican Republic had the largest number of visitors of any Caribbean Island, making up 2.9% of the all visitors to the Americas region.

In 2006 the total expenditure by visitors was $3180.4 Million.

World Tourism Organisation, “Tourism highlights 2007”
The Dominican Republic had the 2nd largest increase in visitors throughout the whole Caribbean in 2007: 7%

Economic Growth
Caribbean update, May 2008
In 2007 Foreign Direct Investment (FDI) increased in the Dominican Republic by 16.3% to US$723.3 million. FDI for Real Estate increased by 120% and in tourism by 58.1%.

Tourism Development Law – Guzman Ariza Law Attorneys

This is a good example of Dominican incentives to increase pace and process of development in the tourist industry.

Qualifiers for the incentives include: Hotel facilities, resorts and/or hotel complexes; Construction and/or operation of tourist infrastructures, such as aquariums, restaurants, golf courses, sports facilities, and any other that may qualify as a tourist activity.

The Incentives for Businesses domiciled in the country include one hundred percent (100%) exemption from paying the taxes listed below:

1. Income tax

2. National and municipal taxes levied on the use and issuance of construction permits, including land purchase documents.

3. Import duties and other taxes, such as tariffs, fees, late charges, including the Tax on Transfer of Industrial Goods and Services (ITBIS) that are applicable to the equipments, materials and furnishings needed for initially equipping and putting into operation the tourist resort concerned.

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Quotes and Information Specific to St Lucia

Tourism
Caribbean tourism organisation, “St. Lucia 2006”
In 2006 the breakdown of international visitors to St. Lucia breaks down as follows:

USA 117,450 (39.8%)
UK 73,312 (24.2%)
Canada 17,491 (5.8%)
Caribbean 78,464 (25.9%)
Other Europe 9,648 (3.2%)
Rest of World 3,450 (1.2%)

The number of UK visitors to St. Lucia in 2006 was 73,312, 24.2% of the total number of visitors to the island (302,510). The total number of arrivals has increased by 19.4% since 2002 at an average rate of 4.68% per year during this period

In 2007 the total expenditure by visitors was $808.3 Million
The tourism budget was $6.918 Million.

In 2007 Visitors from UK rose 8% and Cruise ship arrivals rose 69.7%.

St. Lucian Government, “Tourism by numbers” Budget Address 2008-9
The St. Lucian Government has allocated an extra 148% funding to the tourism industry from 2004 – 2008, with an average increase of 27.7% per year. The allocation for the tourism sector in 2008 – 2009 was $53.6 Million.

Occupancy rates increased on small properties 10.7% and an average of 6% over 2 years to 70.3%. The whole island had an occupancy rate of 67.8% up at an average of 4.5% over 2 years. In 2007 the Hotel occupancy was 69.7%.

In 2007 the number of UK stay-overs increased by 8%.

Economic Growth
Eastern Caribbean Central Bank, Annual Economic and Financial Review 2007
Economic Growth in the St. Lucia has been on average 3.45% between 2003 and 2007.

Budget Address 2008-9
In 2007 the real estate sector grew by 7.6%.

St Lucia the new tourist destination

Ft.com, 10 May 2008
“…now there’s another Caribbean location for those wanting a home combining sun and the simple life in the shabby-chic style of the old Barbados. Welcome to St Lucia.”

Financial Times, 21 April 2007
“In an effort to protect its natural heritage from overdevelopment, the Caribbean island’s government now has an environmental section in its ministry of planning and nearly 30 laws setting out restrictions on new construction. But Dolby, whose company, DCG Properties, is building the £400m Le Paradis next to the sleepy village of Praslin on St Lucia’s east coast, says he welcomes the safeguards.”
“Spoil a place like this,” he says, sweeping his arm across a 550-acre vista, “and you spoil your greatest asset.”

“St Lucia is as progressive in its property schemes as it is in environmental protection, with a growing number of resorts where developers, hoteliers and owners share both risk and profit.”

Ft.com, 10 May 2008

“Recent changes to limit development include a compulsory environmental impact survey to measure the effect of a scheme on land, local people and wildlife. There is also a ban on building new homes within 100 metres of the coast.”

The local authorities are acutely aware of the high density building on some of the other Caribbean islands,” says Charlotte Wilson of Savills, the London-based estate agency that sells property on the island. “They’re working with conservationists and introducing restrictions to ensure St Lucia doesn’t go the same way.”

 Here are some news links for information about the Caribbean region. It makes some interesting reading as it is clear even with the “credit crunch” the region is booming.  

Global credit markets may be depressed but the investment banking community continues to show strong interest in doing business in the Caribbean.

There is strong interest in the Caribbean from the investment community that is looking at the future and the vacation market continues to be healthy.

St Lucia & St Vincent offer excellent overseas investment prospects to escape the UK property crash

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